Labour unions have won the battle over EPF interest rate with the Finance Ministry agreeing to 8.8 per cent interest to be paid on EPF balances for 2015-16.

Earlier, going against the recommendation of the Central Board of Trustees (CBT) of the Employees’ Providend Fund Organisation (EPFO) to pay 8.8 per cent, the Finance Ministry had said that 8.7 per cent interest should be paid for the year.

Labour Minister Bandaru Dattatreya announced the decision to raise interest rate on a day employee unions had called nationwide protests against fixing interest rates lower than 8.8 per cent decided by the retirement fund body EPFO as well as 8.75 per cent paid for the previous fiscal.

“I am happy that finance ministry has agreed to 8.8 per cent for 2015-16,” he said.

The Finance Ministry’s decision was roundly criticised by the trade union representatives in the CBT, who had called it an unwarrented intervention. They had said that Finance Ministry’s clearance is just a formality and a custom that has been prevailing over the years and that it had no right to overrule the recommendation of the CBT.

The matter was also raised in Parliament on Thursday where opposition members also criticised the Finance Ministry’s decision to go for a reduction of the rate suggested by CBT.

This would be the third time in a short period that the government had to take a U-turn on its decisions relating to EPF. Earlier, it had to roll-back its Budget decision to tax EPF withdrawals, followed by a roll-back of a notification that sought to provide restrictions on withdrawals till the age of 58.